The story of the ethereum merger began in 2020.
The goal of Ethereum 2.0 is to revolutionize the world of cryptocurrencies: the transition from a proof of work system to a proof of stake system.
However, it seems crucial to note the confusion made on the association between the term Merge with the Ethereum 2.0 project. The term Merge being in fact only a launching stage, initiating this long upgrade to an Eth2.
Why a change to an Ethereum 2.0?
This change is one of the most anticipated events within the crypto sphere especially that of Ethereum.
This Ethereum merge will allow the mainnet stream of Ethereum, known as ETH1 and which is based on the Proof of Work consensus protocol, to join the Beacon Chain, a blockchain that for the time being has been operating laterally using the Proof of Stake consensus protocol and to which it is known as ETH2.
In other words, Ethereum will undergo in the coming months a change that should revolutionize the world of cryptocurrencies: the transition from a system of proof of work to a system of proof of stake.
But why this change?
Before going into the details of the steps that make up the launch of Ethereum 2.0, let’s go back to its raison d’être.
At its launch, Ethereum was based on a consensus mechanism similar to Bitcoin, namely the Proof of Work. This was a logical choice, as at the time it was the most widely used and proven consensus mechanism.
However, as early as 2015, namely the year the Ethereum protocol was launched, its developers already had in mind the idea of a transition from Proof of Work to Proof of Stake.
Vinay Gupta wrote in 2015 on the Ethereum blog:
Proof of Work involves the inefficient conversion of electricity into heat, Ether, and grid stability, and we’d love to not heat up the atmosphere with our software any more than absolutely necessary. Short of buying carbon offsets for every unit of Ether created (is that such a bad idea?), we need an algorithmic solution: the infamous Proof of Stake.
A problem at the transaction level
As the years go by, Ethereum is reaching its limits in terms of transaction processing capacity. This phenomenon leads to repercussions such as a significant increase in gas costs or network paralysis.
It was therefore crucial and urgent for Ethereum to find a solution, hence the idea of the change to the Proof of stake.
Proof of stake offers many promises: speed, efficiency and accessibility.
- The cost of gas, and therefore the commissions within the network, will not be impacted by the event and the switch to ETH2. In other words, ETH2 will not change and make cheaper the operations you can perform on the Ethereum network, because these values will remain unchanged.
- The arrival of PoS is generally seen as something that will help make Ethereum faster. The reality is that the scalability of Ethereum with the arrival of ETH2 will not change, since block production and block size will not change at all. In fact, the scalability of ETH2 will depend on the “chain of fragments” and these will arrive at least by 2024.
- Current ETH2 staking participants will have to wait for the Shanghai update to reap the benefits realized when operating the Beacon chain. All those who participate in staking after the Merger will be able to stake directly and will receive their rewards immediately. The Shanghai update is expected to arrive in mid-2023.
- The EVM update in ETH2 and the arrival of Swarm are still works in progress for which there is no clear and precise roadmap. Indeed, the next updates of Ethereum 2.0 still lack well-defined dates, so we will have to pay attention to its official website to see its evolution.
Date to remember: November 04, 2020
On November 4th, the Ethereum Foundation published the Ethereum 2.0 deposit agreement, the first stone in the building that this update represents. However, this does not mark the final launch of Ethereum 2.0, but the beginning of a series of successive updates, broken down into 3 phases that could extend over several years.
You could understand in the article why Ethereum decided to make a change. A big change that will take a lot more time and will be divided in some phases that you will see in another article.
To be continued…